The government’s legislative push for the sector is stalling, while experts warn of its socio-environmental risks and governance gaps.
Brazil’s data centre capacity could triple by 2030, fuelled by companies from China and the US flocking to the country. The implications for local water and energy consumption are worrying experts.
Brazil is already Latin America’s data centre hub, with an installed capacity of around 800 megawatts (MW). The country has 198 facilities according to the Data Center Map, which gathers information on both operating and planned facilities worldwide.
Data centres are not a new phenomenon, but the explosion of generative AI chatbots has led to a huge increase in demand. The US has by far the highest number of data centres, followed by Germany, the United Kingdom and China.
In December, ByteDance, the Chinese company behind TikTok, announced a USD 38 billion investment for a data centre in Porto do Pecém, in the eastern coastal state of Ceará. Other Chinese companies interested in Brazil include Huawei and Alibaba.
Meanwhile, a US consortium including the asset manager BlackRock, Microsoft, and Elon Musk’s xAI, recently spent USD 40 billion to buy Aligned Data Centers. That company manages facilities in Brazil country and is the parent company of Brazil’s Odata. The national government has encouraged these investments via tax breaks.
Indigenous leaders and environmental and energy experts are concerned about the impacts on local water and electricity availability. Chief Roberto Anacé, an Indigenous leader in Ceará, tells Dialogue Earth he fears shortages could result from the ByteDance facility.
China and US at the centre of the rush
The data centre rush follows concerted efforts by the Brazilian government in the US and China. Last year, the finance minister, Fernando Haddad, told technology investors in the US of his desire to boost a “simultaneously digital and green” economy, by harnessing tax incentives and renewable energy supplies. Meanwhile, the communications minister, Frederico de Siqueira Filho, visited investors in Beijing and other cities in China.
The government launched a National Data Centre Policy in September 2025 that included a special tax regime for the centres, called Redata. By offering tax breaks linked to commitments on environmental standards, Redata aimed to promote more sustainable development of data centres.
“Industry and government are moving to attract more investment to the country, especially large data centres […] focused on artificial intelligence,” Luis Tossi, vice president of the Brazilian Data Centre Association (ABDC), tells Dialogue Earth.
In late February 2026, however, Brazil’s data centre push stalled. Redata had been introduced as a temporary executive order to fast-track investment but it required congressional approval to become law. Political tensions meant that vote did not happen in time and Redata’s tax policy expired.
One of the stumbling blocks was a gas industry attempt to have projects involving natural gas included in the policy. That is what lobbyists with close ties to congress told the Brazilian newspaper Valor Econômico. The original proposal prioritises projects using renewable energy, and the push to broaden its remit to include gas triggered disagreements. This is already having an impact on the data centre plans of major companies, according to Valor Econômico.
“The government is not going to abandon this project,” says Júlia Catão Dias, from Brazil’s Consumer Protection Institute (Idec). “The problem now is a dispute between the gas sector and the government… That is why the bill is stalled, and there is no timeline for its approval.”
Digital sovereignty v water security
Haddad says he is still working hard with lawmakers to get Redata passed in Congress, telling reporters there is a queue of companies looking to invest in Brazil. “I’ve spoken to several senators and explained how sensitive the issue is,” he says. “Those who are committed to national development and sovereignty are fully prepared to take on this challenge.”
Only 40% of Brazilian data is processed within the country, he says. The rest is handled abroad, outside the reach of Brazilian legislation. For the government, therefore, the expansion of data centres would strengthen the country’s “digital sovereignty”.
Igor Marchesini, special advisor to the Ministry of Finance and an architect of the data centre policy, says Brazilian expansion would reduce the overall emissions of the sector thanks to the country’s renewables-heavy electricity mix. “Brazil does not need to burn coal to power a data centre,” he tells Dialogue Earth. About 88% of the country’s generation comes from renewable sources, according to the International Energy Agency.
Others are less certain of how Brazil will meet this increase. Fabro Steibel, executive director of the Institute for Technology and Society, says the government’s proposed strategy remains vague and unclear. Publicly shared information on projected water and energy usage has been minimal, he adds.
Some 80% of data centres in Brazil operate with closed-loop cooling systems, which reuse water to cool servers. This is according to the tech industry trade body, Brasscom, which says that share could reach 90% by the end of the decade.
But André Fernandes, director of the Recife Institute for Research in Law and Technology, points out that the initial water requirements are still very high: “That water has to come from somewhere. It is no coincidence that these projects are usually located near watercourses.”
TikTok and the Brazilian firm Casa dos Ventos tell Dialogue Earth that the data centre buildings will have a cooling system with a capacity equivalent to two Olympic swimming pools – about 5 million litres of water. They estimate daily water use of between 20,000 and 30,000 litres (equivalent to the consumption of 46-72 households) with around 10% used for cooling.
The closed-loop model raises other concerns. José Renato Laranjeira, founder of the Brazilian Laboratory of Public Policy and the Internet, says that although such a system reduces water usage, it requires more electricity to function than alternatives because of its reliance on powerful refrigerators: “There is an increase in energy demand associated with this choice.”
Local conflicts
Experts interviewed by Dialogue Earth say the data centre rush is happening with little consultation.
Idec’s Dias, alongside other experts consulted by Dialogue Earth, question the reasons for the government’s push to attract facilities, particularly without embedding effective environmental safeguards, or protections for the public interest. “Artificial intelligence for what? For whom? On what terms? Do we really need it? Because that would determine what kind of data centre we want,” says Dias.
Fernandes says the Redata bill only mentions the use of renewables generically, and fails to address the socio-environmental impacts of these projects: “It does not mention electronic waste, nor does it address the impacts on the neighbourhood and territories, or water consumption and disposal.”
There are local concerns, too. Anacé and other leaders in Ceará are trying to block the installation of TikTok’s data centre, fearing disputes over water and electricity in their communities. “They say there is surplus energy. For now, there is, but when the data centre is operating at 100% capacity, there will be a shortage,” says Anacé.
The companies tell Dialogue Earth the project’s energy will come from dedicated renewable sources, such as new wind farms, which are still in the planning stage. As such, they say, it would not compete with local electricity needs.
An analysis of internal documents seen by the media outlet Intercept Brasil indicates the TikTok project’s daily energy consumption is equivalent to that of 2.2 million Brazilians. São Gonçalo do Amarante, where Porto do Pecém is located, is home to just 54,000 people.
In August 2025, protesters occupied the state environmental agency and filed a legal case with the Federal Public Prosecutor’s Office (MPF), which subsequently pointed out flaws in the licensing process.
According to the companies, “the environmental licensing of the data centre has been conducted in strict compliance with current legislation.” They are still analysing the MPF’s report.
Anacé says his people do not reject local development initiatives, but it is essential for projects of this size to include grassroots consultations with affected communities: “Neither a cashew tree nor a mango tree bears fruit if it has no roots.”
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